29 May 2016

White males are Donald Trump's base. No other group supports him As an old white male who is friends with many similarly old white males, I can tell you that most of us never stop to question whether we'd have similar levels of income and wealth if we were female or a minority. There seems to be a simple belief among us that if "we" were suddenly made black or Hispanic or female - or even, say, an Hispanic female - that we would do just as well, in spite of all the evidence to the contrary. It's tough to imagine ourselves as the other.

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This is the time of the election cycle when conversations and Facebook posts are cluttered with cries of dismay about how we get such poor choices for our elections, as if it reveals some shortcoming in our candidates. In fact, this lament reveals a shortcoming among our voters. In a nation of 300 million people who are growing more diverse every year, there simply is no way that the candidate who emerges from the primaries will be someone everyone is happy with.
Imagine that the only time you could hear music is in public places and we had to vote for the music we'd listen to over the next four years. You might love rock but even so you'd feel badly about choosing that to the exclusion of jazz or even the easy listening you campaign against. We have such diverse tastes in music that we'd never pretend to agree to one style of music even for ourselves, much less everyone. We'd finally agree on Frank Sinatra (again) or Bach (again) but none of us would be very happy about it.
There are two problems. One is that none of us are always conservative or liberal or federalists or states-rights people. The other is that whoever we elect will have to find a way to represent the uneducated, rural voter in Kentucky as well as the over-educated, urban voter in San Francisco. This guarantees that whoever wins 51% of the votes of this country will leave about 85% of voters feeling like the winner doesn't really represent them.
In a nation of 300 million, you can't get it your way. You are different from everyone else and so are they. Everyone feels like an outsider, so at least you have that in common with everyone else. You're not one in a million. You're one in three hundred million.

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As the father of an adult woman, I have a new perspective on feminism. From one angle it is very simple. It's true that women are sexual beings who love romance and sex and babies. Just like men. But it's also true that men get to be who they are outside of that. Men get to be accountants or mechanics or project managers without their sexuality ever being an issue. One simple take on feminism is that women have exactly the same deal, getting to be a person who is only incidentally sexual or female. It's simply about being a person first.

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The Republican Party is making its biggest gamble ever. The party is showing its refusal to support evolution by devolving from Lincoln to Eisenhower to Reagan to Bush to Trump. More than that, most of the party has decided to support Donald Trump. There is so much to say about this but I'll simply say this: when you've decided that religious freedom is negotiable, you've thrown in the towel on any claim of having principles. Trump has declared clearly that he wants to ban Muslims, effectively declaring his desire to end religious freedom. It would be incredibly comical to think that someone who doesn't know the difference between "second Corinthians," and "two Corinthians" (which sounds like the setup to a joke) would take it upon himself to decide which religions should be allowed. Would be if it weren't for the fact that Republicans actually support this candidate.
Republicans know that if they don't support Donald, they're handing the presidency to the Democrats and - quite possibly - the Senate as well. But the big gamble is that if they support him, they could still lose the presidency and then tar their reputation completely with millennials and most anyone under 60. Of course given that so many of them are old, the prospect of leaving behind an obsolete party apparently worries them about as much as leaving behind melting ice caps.

28 May 2016

Maybe we raise children, pursue romantic entanglements, join churches or movements and form friendships because we never feel as alive or as fully realized as when we love. We create reasons for love that are incompatible with the facts in order to unharness this mad impulse to love. "Isn't she perfect!" we say of the woman who so obviously isn't. "Isn't he adorable!" we say of the toddler who will begin to drive us crazy in one, two, three .... seconds.

We fabricate stories in order to justify what feels most alive for us, this feeling of love. And thank goodness that for all of the fatigue and exasperation of raising children, it is one of the most unvarnished and raw expressions of love a person will experience. Thank goodness because it makes us happily enter into something that puts so many demands on us. The heart needs love in the same way that the brain needs sleep and whatever self-delusion or sacrifice it takes, we will pay that price because whatever the price it is cheap compared to its value.

Within a few centuries, the traditions and teachers that defined the Jewish, Hindu, Confucian and Buddhist faiths emerged. Most contemporary religions evolved from those early thinkers.

Curiously, these religious traditions emerged at a time when innovations like cities were creating unprecedented wealth. In hunter gatherer times, it's tough to accumulate wealth. When you domesticate crops and begin to trade and specialize in cities, it is easier to accumulate wealth. And, of course, wealth accumulates at different rates which means that while the community was getting wealthier, not everyone was getting wealthier. These religious traditions emerged as a way to offset the pure market forces that would have left the poor impoverished and each tradition introduced (or more likely, codified) morals and norms that would show respect for the poor and weak and not just conform to the rich and powerful. Jesus made it clear that we'd be judged by an all-powerful God based on how we treat those with no power.

The Industrial Revolution stimulated another round of social awareness, this time in the form of government programs. There is nothing novel about our time in this respect. We're once again living through an inflection point in the creation of wealth akin to the one that inspired Dickens to write so movingly about the poor and disenfranchised. Dickens helped to stimulate new policies for the poor like the abolition of debtors' prisons.

At each point in history when big economic changes have created new wealth, one outcome is poverty. There are two dimensions to this. One dimension is absolute. People who made a living farming became displaced as factories emerged and agriculture jobs disappeared. Some people can't adjust and as a result they really are worse off by this supposed economic progress. Another dimension is relative. Because there are people now able to buy manufactured goods, you might now feel poor because you can't - even though you never could before either.

Today's income inequality is partly about poverty resulting from a loss of jobs to overseas and negative consequences from the Great Recession. It's more broadly about another inflection point in history, though, in which it is possible to create new wealth that the median worker is not yet pulled along by.

Entrepreneurship is creating a crazy amount of wealth and income in the US. Nowhere does this seem more apparent than in Silicon Valley where the ten most valuable companies (e.g., Apple, Alphabet (nee Google), Facebook, Oracle, Intel, etc.) are worth more than $2 trillion. A GDP of $2 trillion would put a country in the top ten in the world, ahead of Canada, Russia, and India. The wealth concentrated in Silicon Valley has driven up median home prices to over a million dollars and is unprecedented in history. This doesn't just create wealth; it reveals and creates poverty. In Silicon Valley there are tales of people making $80,000 a year who are homeless. That's a distinct kind of poverty.

But it's worth examining the reality of this new, entrepreneurial economy in which incomes are growing more than ever. A higher percentage of households are making income over $100,000 than ever in history.

Meanwhile, there has been a drop in the percentage of households making under $100k.

Income is going up. Not for everyone but for a growing percentage of Americans. This is not an impossible problem to solve. Policies that would please Dickens and the religious leaders from Confucius to Christ are simple enough. We take some portion of that new wealth and income and use it to mitigate the poverty of those who haven't been brought along by the gains of the new economy.

For some this is offensive, suggesting that we're rewarding those who can't find their own reward in the market. It's naive, though, to believe that we live in the first period in history in which poverty has disappeared.

Whether this new economy will drive changes as sweeping as those defined by Dickens and Buddha or simply affirm the relevance of their insistence on compassion in the midst of progress has yet to be seen.

19 May 2016

First, they created him by focusing on all that is bad and alarming. Outrage is good for ratings and they've kept anyone who will pay attention outraged since the emergence of 24-7 news. When you are outraged, the only thing you can agree on is that the status quo has to go and that even an outrageous candidate is better than none at all.

Second, they've enabled him by taking him seriously. Trump hasn't a clue about anything and yet they report on his candidacy as if it were a serious thing worthy not just of consideration but incessant focus. They've learned that the only thing better for ratings than alarm is Trump and so have focused on him as a ratings bonanza.

Our understanding of our world outside of our immediate experience is mediated by the media. There is no good reason that a reality-show star should become president except that he's already shown his ability to get ratings. Shows that get good ratings get renewed and shows with bad ratings are cancelled. The rest of the Republican field was cancelled and Donald has each month been renewed because he is best for ratings. Given the media's focus, the American people have decided that he must be the real deal.

It has become increasingly clear that Trump is going to become president and there is absolutely no good reason for this except for what he does for ratings.

16 May 2016

In the late 1940s, the labor participation rate for men was nearly 87%. For every 100 men working, there were only 37 women.

By last month, after declining for 7 decades, the labor participation rate for men was 69.3%. Now, for every 100 men working there are 82 women working.

You can see that in this graph. The blue bar - men's participation rate - slowly falls over time. Meanwhile, until about the start of this century, women were gaining on men.

Curiously, women's participation rate as a percentage of men's has seemed to level off at about 80%. It hasn't moved much since the turn of the century and it seems plausible that it won't ever catch men's rate of labor participation.

So that raises a question. Has the steady decline of men's labor participation rate been because of women entering the labor force or do we simply need fewer workers as a percentage of the population? Will women's participation rate as a percentage of men's stabilize and if so, will their rates of participation join men's in slow, gradual decline? Will households - and not just men - need to work less in the future?

I don't know enough about why men's rate of labor participation has fallen so steadily for nearly 70 years to say. I do think it's a remarkably steady fall and it might just be a leading indicator of labor participation rates for men and women.

Now we need another line that shows robots' labor participation rate. Because maybe - just maybe - that rate will climb as women join men in gradual liberation from work.

This seems contradictory on the surface. As more people work longer, you would expect labor participation rate to rise.

What if these two facts are related by a common cause?

The 1960s and 1970s saw the beginning of Johnson's Great Society, the introduction of medicare and the strengthening of social security that made retirement easier and more certain for more people. Before FDR introduced social security, the population of retired people was low in part because life expectancy was lower and in part because many people could not afford to stop working. Starting in the late 1960s, people could afford to retire even if they were working class. The percentage of people over 65 who were still working steadily declined from that time. Until, that is, about the 1980s when it leveled off and then in the early 2000s when it began to rise again.

(As a separate factor, it's worth noting that participation rates rose in the 1960s as more women entered the workforce. Their participation rate doubled from 1950 to 2000.)

In the 1960s, two things happened that made retirement possible and smoothed out some of the variation in retirement income. Social security and medicare, obviously, helped in this regard. Additionally, more Americans were retiring from corporations that offered pension plans. So many Americans had access to two retirement streams - social security and pension payments - that saved them from poverty but could not make them rich.

In the 1980s, the model shifted from pensions to 401(k) accounts. Given a 401(k) can be managed by an individual and given that returns can vary so much from one investor to another, retirees were suddenly dependent on a sum of money that could make them rich or leave them poor. If your average return is 2%, you might struggle to save enough to retire. If your average annual return is 20%, you might be rich. Pensions didn't make anyone rich but lowered the chance someone might be poor; by contrast, 401(k)s could make you rich or leave you poor.

And then of course in the 2000s, investments took a huge hit. Not just stocks but even homes which some people used as retirement backup. (It's not unusual for people to own a home where jobs are and then sell that at retirement to move to where jobs are not and where home prices are lower, making equity in a home another source of retirement money.)

If so, reliance on 401(k)s would lead to two things: more people retiring early, which would lower labor participation rates, and more people having to work past the age of 65, which would raise the percentage of folks over 65. And of course both of these things have happened.

[Before someone points out that the Great Recession and a slow recovery from it have greatly contributed to the lower labor participation rate, let me say that they're right. The Great Recession did knock labor participation rates for a loop from which they haven't fully recovered. But studies suggest that the Great Recession doesn't account for the entirety of the drop. Between a third to a half of the drop seems to be the result of something else going on, something that could be attributed to more people retiring sooner.]

The Rolling Stones have asked him to stop but Donald continues to use their "Start Me Up!" to rally the crowds. George W. Bush wanted to use that as his opening song until his aides explained to him that it's a song about a vibrator. Donald, a compulsive liar who has made only 3 verifiably true statements during his entire campaign, at least seems honest in this choice of a song: it's as if his subconscious is warning us that we're about to get screwed.

11 May 2016

In last night's debate between California's senate candidates, front-runner Kamala Harris was asked by a San Diego State University student how she would make college more affordable. She responded on how, as the state's Attorney General, she'd gone after Corinthian College for charging students for an education that left them with debt payment but not much in the way of job prospects. It's good that she went after Corinthian. It's bad that a previous attack on a for-profit institution was all that she could muster in a state with a $30 billion college and university system. (In her defense, a one-minute response on a topic like this is laughable. Almost by definition, any response will sound more like a bumper sticker than an op-ed.) The impression I was left with was that in her mind the real problem is the for-profit sector, and that made me wince.

I hesitated to write this post because what I have to say seems so very obvious. It's like saying, "everybody is different." Duh. But then I watch national GOP debates and hear a messianic belief in markets and hear California Democrats who seem to have at best a grudging acknowledgement of the power of markets and I think, perhaps this is not so obvious at all. What is this? The path to progress is a straight and narrow one that involves continuously balancing free markets and free elections.

About a century ago, people began to realize the incredible power of governments to do good. The nation-state as a democratic institution was still largely novel around 1900 and citizens were just becoming aware of its power for good. Bismarck in Germany in the late 1800s was one of the first to institute things like old-age pensions and in various places unemployment and welfare programs were coming into practice. In the 20th century it became increasingly clear that governments could do amazing things like educate everyone, build roads and highways, put in place electric grids and dams, and even land on the moon. Anyone unimpressed with governments simply was not paying attention.

So along came communists who did not just rightfully feel delighted at the power of government but had decided that they didn't need markets to create the perfect society. What resulted was impressive in some ways (it's worth remembering that the Soviet Union's Sputnik got into space before anything out of the US) but a disaster in most. It wasn't that communists weren't right to be a little intoxicated by the power of government to transform lives. It was that they were wrong to think it was enough.

Now, roughly 100 years later, we have people who rightfully feel intoxicated by the power of markets and wrongfully see in them a panacea for progress. This would describe the GOP's presidential candidates. And these people are sort of right. Markets bring so many great products and innovations. While government seems able to bloat budgets, markets often make things cheaper. Markets are engines that create new jobs, wealth, and products. Anyone unimpressed with markets simply isn't paying attention.

Jon Stewart recently said of the Republican Party that they have a great thing going. The argue that government is unable to do anything good and then prove their thesis by obstructing government. At the national level, the GOP is slowly making itself harmful by its blind faith in markets that is akin to communists' blind faith in governments Ted Cruz wanted to eliminate the Environmental Protection Agency and dozens of other agencies and departments, so pure was his belief in the power of markets to even protect us from anyone who would disregard health in search of profits. And it's worth remembering that Cruz was the candidate who the party elders (reluctantly) supported in the final contest with Trump.

Maybe it's because the League of Women Voters decades ago decided that there was no topic so complex that it couldn't benefit from a 1 to 2 minute answer. At that point, debates between experts and politicians who had memorized sound bites tilted in favor of the master of sound bites rather than the master of the topic. And gradually, it became important to have answers like "Government programs!" or "Markets!" and then we drifted away from the notion that what made our country great was not a reliance on one or the other but a continual balancing between these two amazing, transformative forces for good. And while the first generation of politicians forced into sound bite debates realized they were simplifying complex topics, the generation raised on such debates began to think that these sound bites were the topics.

Ideally, we have two parties who both believe in markets and government and we as voters simply choose whether we want to - in this election - steer more to the right with fewer regulations and taxes or to the left with more regulations and government programs. Instead, we have a Republican Party that preaches about the invisible hand of markets as if it were the left hand of God. And we have too many Democrats who - as Kamala Harris apparently does - can't even see the $30 billion problem before her for her because she's focused on the failings of a (relatively) small private business. At the national level, the GOP swears allegiance to markets and just swears at government. Here in California where Democrats have a super-majority, I have the suspicion that too many Democrats are more clear about the market's flaws than its strengths.

The iPhone is possibly the most profitable product in history. It relies on a host of products - from touch screen and GPS to chips and small memory devices - that emerged from government research labs. Such technologies take too long to develop and are too uncertain to be funded by the private sector. If you love your smart phone, you love the fact that you live in a world where strong government funding is coupled with strong private investment. That is, you love a world where smart people are doing what they can to strengthen governments and markets.

And this, finally, is the punchline. We are not hindered by our institutions, however frustrated we might feel with government or corporations. We are made by them. Without institutions, we're little different than apes. Forced to compete with an ape one-on-one - whether in hand to hand combat or simply to compete for resources and ability to survive in the wild - you would lose. Forced to compete in groups of a hundred or a million, the ape loses. We don't live the way we do because of our individual abilities. We live this way because of our ability to coordinate through institutions. And the meta-institutions of our time are democracies and markets, the two forces that have - more or less - brought us the modern world. It's a straight and narrow path to progress and it involves continuously strengthening and improving our markets and governments but never running mindlessly towards either one as if in that direction we will find utopia.

It would be nice to feel more confident that something this obvious really were that obvious.

10 May 2016

I think that Donald Trump's success in the Republican primary is evidence suggesting that a for-profit news media with incentive to gratuitously alarm the polity in order to drive ratings is incompatible with a functioning democracy. For-profit can be great for entertainment. It doesn't seem to work for informing voters or helping to distinguish between real issues and non-issues, between actual risks to life and perceived ones.

08 May 2016

This week, Trump said that he'd default on US debt. This would, quite simply, blow up the economy. This isn't conjecture. It's just a fact. And it's one more way that Donald is showing himself to be an idiot savant, a man who is brilliant at getting media attention but wildly incoherent with policy. It's hard to imagine a more dangerous combination. He could blow up the economy once elected or just blow up the GOP in the general.

I have a simple question. If Trump were intent on exposing the Republican Party's dependence on racism and on engineering a loss not just for the presidential election but of the Senate, how would his behavior to this point be any different than what we've seen so far?